Trademarks give Microsoft a smash-and-grab shot at Google search revenue 16 Feb 11
Microsoft’s in-house counsel are tight-lipped regarding Bing’s position on trademark use in keyword ads. At the recent trademark symposium they hosted, the most they said was that the policy was “fluid”. But now Microsoft has announced that Bing is to adopt a Google-like trademark policy: advertisers on ‘Bingle’ will be able to purchase keywords relating to trademark terms. This is a huge shift in search: simultaneously a vindication of Google’s business model and a nod of admiration for the company that monetised other peoples’ trademarks.
Microsoft’s plans are detailed in the following text, sent to Eric Goldman, the Santa Clara University School of Law professor who studies technology and the law:
We are writing to alert you to some pending changes to the trademark policy within the Microsoft Advertising adCenter IP Guidelines. Starting March 3 2011, adCenter will no longer review trademark keyword complaints. However, adCenter will continue to investigate brand owner complaints related to trademark use in ad text.
We want to make it easier for you to manage your search advertising campaigns. By aligning the adCenter trademark policy with the current industry standard, we hope to help simplify your marketing efforts across the various online advertising programmes.
This is a fascinating, if not unsurprising, change. At Redmond’s recent trademark symposium, a number of delegates discussed Bing’s hitherto reluctance to allow bidding on trademarks, especially given Google’s collection of favourable judgments for this practice and the discovery that Google’s ads confused even its own in-house counsel. The consensus among non-Microsoft employees seemed to be that, since Microsoft was not a search company, it did not need to take the apparent risk in order to generate the profits seen at Google. But how exactly the business calculated risk versus potential profit with reference to Bing’s trademark policy was unclear. Now we know that, thanks to Google’s court success, that risk has diminished.
As Goldman comments: “Given that Google has done all of the hard legal work for Microsoft, Microsoft can free-ride on its results. On the other hand, we still have a major pending appeal in the Rosetta Stone v Google case, and the appeals court could issue a ruling that casts doubt on both Google's and (now) Microsoft's trademark policies. I guess Microsoft is willing to take that risk.”
The Rosetta Stone case is not the only element of risk remaining; the other, more abstract risk is posed by Microsoft’s standing among other in-house trademark counsel. Hardly any other news channel will consider this aspect, so let’s outline it here on WTR.
Google is a power brand with an innovative service funded by an amazingly simple business model; in that sense, it is admired by any smart trademark counsel. Lawyers also praise Google’s ability to protect its business model in the courts, and its contribution to the development of the law around technology and trademarks. However, Google has also derived revenue from monetising the trademarks owned and managed by other companies. This had never been done before. It’s a remarkable and entirely unforeseen development in trademarks. However, for many trademark owners it is a major pain. Just ask LVMH, Rosetta Stone, Interflora and all the businesses that have received aggressive cease-and-desist letters from their competitors and, rather than take a legal risk, have amended or scaled back their keywords marketing campaigns. This has left Google in a sticky situation in the world of trademarks: it wins respect in the courtroom but causes major headaches at the desk of trademark counsel.
On the other hand, Microsoft is a trademark lawyer’s unmitigated success story. It has built one of the world’s most valuable brands around innovation. Before tech was cool, other tech companies struggled to differentiate themselves in an apathetic market; Microsoft cut through them all with life-changing technology and handy trademarks that helped us to understand them. Just think about the power of the WINDOWS marks in helping us to understand our new interface with computers. Microsoft therefore has enormous goodwill among trademark counsel. Unlike Google, it is untainted. So among trademark counsel – ie, those who will have to deal with the sharp end of competitors bidding on trademark keywords – Microsoft has more to lose.
Microsoft has obviously decided that the potential revenue this new policy could bring and the argument that trademarks-as-keywords is now the “industry standard” are enough to cancel out this risk. Trademark owners have fought each other over trademarks-as-keywords (and have won – most recently in the Binder Case). But they have failed to stop Google monetising their rights. After 3 March, will they dare to take on Microsoft?
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